Few Cryptocurrency Holders Reporting Gains Or Losses To IRS – Survey

Investing, News, Regulation | February 14, 2018 By:

In a survey that is sure to raise the hackles of Internal Revenue Service (IRS) investigators, credit-monitoring firm Credit Karma has indicated a bad trend for the US government – few people are paying any taxes on cryptocurrency gains or losses.

Of the first 250,000 tax filings surveyed, less than 100 people reported even owning any cryptocurrency, Credit Karma claims. That’s about 0.04% of cryptocurrency owners, Credit Karma estimates.

“While so few people have reported bitcoin and other cryptocurrency gains or losses, we’re not surprised,” said Jagjit Chawla, a general manager in Credit Karma focused on taxes.. “Generally, Americans with more complex tax situations file later in the tax season, especially if they expect that they’ll owe money. However, given the popularity of bitcoin and cryptocurrencies in 2017, we’d expect more people to be reporting.”

The IRS is well aware of the issue. It has been locked in a legal battle with Coinbase, the largest US exchange, over a request for customer records. The IRS is seeking those records to determine who, if anyone, has not reported their gains or losses, as required by law.

A US federal judge in San Francisco ruled that Coinbase must give the IRS records on users who had more than $20,000 in annual transactions on the platform between 2013 and 2015. More than 14,000 customers fall in that category.

Coinbase cites the right to privacy and government over-reach in its efforts to deny the requests. Coinbase called the ruling  a “partial victory.” citing that requests for complete records on all customers were narrowed to a smaller segment.

The IRS originally requested user data that included complete profiles, documents regarding third-party access, transaction logs, and records of payments processed, as well as correspondence between Coinbase and Coinbase users, account or invoice statements and records of payments.

The court ruled that the IRS can only receive taxpayer ID numbers, names, date of birth, addresses, transaction logs and account statements. Any other information was deemed “not necessary” to any ongoing investigation.